Capitalist disaster

NAOMI Klein's book The Shock Doctrine explores how the state manufactures or uses "disaster situations" to open up new markets for capitalism.

This might be achieved by the destruction of infrastructure and subsequent imposition of "reconstruction" plans implemented by big business, which then reaps the profits of reconstruction.

It might also be achieved by capturing public infrastructure and other resources, which are sold to big business at far below market value. Big business then exploits these infrastructure resources for their hitherto under-realised commercial potential.

Disaster capitalism is not only practised by the US. It also happens in Britain. And it is happening in the north of England at this very moment, in a big way.

As housebuilding on the "green belt" has become politically unfeasible, housebuilders have found that they need to open up new markets by finding "brownfield" sites within northern cities.

Enter "disaster capitalism."

What is perturbing about the way that disaster capitalism has struck northern cities concerns the role of academic research in its genesis.

Since 1999, academic researchers have been creating the impression that housing markets in certain parts of northern cities are "failing" or have "failed."

Their explanation of this "chronic failure" goes as follows - terrace housing built for an industrial working class has become "unsuitable for modern living" and therefore "obsolete." This is because the working class is dying out and being replaced by an expanding population of "contemporary 'flexible' service-sector households" or the "new" middle class.

This new middle class is "increasingly influenced by a consumer-driven society" and therefore wants "modern contemporary homes" rather than "outdated" terrace houses.

The point is that these researchers have been proclaiming that working class neighbourhoods made up of terrace houses are staring "housing market disaster" in the face.

It might beggar belief for the readers of this paper, but the symptom of this disaster is that house prices are too low because members of the expanding middle class do not want to buy houses in these predominantly terraced neighbourhoods.

The researchers tell us that these neighbourhoods will "fail completely" unless "radical action" is taken to give the middle classes what they want.

What is therefore needed is "an entrepreneurial approach (to regeneration) which maximises the value of land, developer contributions and the rising confidence of individual consumers" who will move back into these neighbourhoods if terrace housing is replaced by "high-value" housing that is "modern and contemporary."

Welcome to new Labour's housing market renewal (HMR) initiative.

HMR is essentially a "disaster recovery" programme that involves the demolition of nearly 70,000 "obsolete" terrace houses to make way for new and more profitable housing developments, with working class people displaced by a gentrifying army of middle class "saviours."

For a government that is committed to an unfettered free market, the scale of intervention is second only to its support for Northern Rock.

The 15-year HMR programme, announced by then deputy prime minister John Prescott in 2002, has, so far, cost around £1.2 billion.

The government has recently committed another £1 billion of funding to these "disaster" areas for the next three years.

So, "obsolete" terrace houses are now being demolished en masse to be replaced by "high-value" "modern contemporary homes" built by large-scale housebuilders.

Thousands upon thousands of working class people are being told to leave their homes to allow this to happen and, if they refuse, they are being issued with compulsory purchase orders on their homes.

Against the background of a prolonged housing boom and a severe shortage of social housing, these working class households are now facing unprecedented difficulties in gaining access to low-cost housing.

Yet, HMR continues to reduce the stock of affordable housing by targeting some of the few affordable neighbourhoods that are left in the north of England.

This is no accident. Rather, policy-makers seem to have read Marxist geographer Neil Smith's "rent gap" theory of gentrification, in that those neighbourhoods which have been targeted for demolition are the areas where the "rent gap" - the difference between the current low cost of housing and the potential for vast profits after redevelopment - is greatest.

Put simply, while house prices in these working class neighbourhoods are relatively low compared to other areas in the city, the potential monetary value of the land is much higher when it is redeveloped with "high-value" housing.

So, the land that working class homes once sat on is now being taken away from working class people for next to nothing and transferred to large-scale builders who are redeveloping it and reaping the profits.

This is disaster capitalism par excellence, with state-sponsored gentrification in northern cities being legitimised by the academic manufacture of a "disaster myth."

To add insult to injury, we are being told that this is something that we should celebrate because it contributes to the "urban renaissance."

It is a shame that working class people do not feel in such a celebratory mood. But why should they?

They, after all, are counting the cost of losing their homes, communities and cheap housing while others count the profits that they are reaping from this scheme.

So, while new Labour and its academic allies call this the "housing market renewal," we prefer to call it disaster capitalism.

Chris Allen is the author of Housing Market Renewal and Social Class which is to be published by Routledge in May this year. All royalties from sales of the book will be given to Fight for our Homes - www.fightforourhomes.com. Lee Crookes is an academic who writes about housing market renewal and has supported residents faced with compulsory purchase orders.